Snapchat Is About to Make a 26-Year-Old One of the Richest People on Earth

Next month, Snapchat parent company Snap will begin selling shares on the public market in one of the most highly anticipated I.P.O.s for a tech company since Twitter went public in 2013. With Uber and Airbnb still raising funds and bolstering their bottom lines as they mull public offerings of their own, Snap is expected to serve as a bellwether for the otherwise slow-moving tech-I.P.O. pipeline and a critical test of the public appetite for other unprofitable Silicon Valley unicorns. When Snap does go public, the company said in documents filed with the S.E.C. on Thursday, it will price its I.P.O. at $14 to $16 per share, with a total of 200 million Class A shares. At that price, the offering could value Snap at $22 billion—an eye-popping valuation given its recent losses, but still on the low end of its private-market valuation.

C.E.O. Evan Spiegel, 26, and co-founder Bobby Murphy, 28, stand to make about $5 billion off of their shares in the company when it does finally go public, beginning with the $256 million in stock that they each plan to sell when Snap debuts, according to the documents. Both Murphy and Spiegel are the biggest shareholders in the company, and together they will control about 89 percent of voting rights in Snap once it’s a public entity. (Their third co-founder, Reggie Brown, was paid $157.5 million in a settlement with his estranged co-founders after he filed a 2013 lawsuit over being forced out of the company.)

For Snap’s I.P.O., Spiegel took a page out of Facebook C.E.O. Mark Zuckerberg’s playbook, consolidating the executive power at the helm of his company ahead of its offering, and offering shares without any voting power, allowing Spiegel and Murphy to retain control even after selling huge amounts of stock. The two co-founders currently plan to sell 16 million Class A shares—which don’t have voting rights—when the company goes public, with the expectation that will sell more over time.

Snap’s co-founders aren’t the only ones who will make money by shedding some of their shares during Snap’s public offering. Shareholders like Snap chairman Michael Lynton, formerly of Sony, will sell up to 54,907 Class A shares, and make as much as $878,512 during Snap’s I.P.O. Benchmark partner Mitch Lasky will make up to $171 million. Snap’s earliest investor, Lightspeed Venture Partners, could make as much as $74 million. Once Snap goes public, Spiegel will also receive 3 percent of its stock as an award.

It remains to be seen how the public market will react to Snap, and whether it will emerge as a highly valuable, diversified social-media company like Facebook, or one that does well on I.P.O. day but flops afterward. Some potential investors have already “reacted with fury” over Snap’s decision to sell shares with no voting power.

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